Investing: Energy-heavy indexes fail to keep the pace

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http://www.iht.com/articles/2006/04/24/bloomberg/bxinvest.php


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Investing: Energy-heavy indexes fail to keep the pace
By Saijel Kishan and Tom Cahill
Published: TUESDAY, APRIL 25, 2006

LONDON: Those who took the advice of Goldman Sachs Group and Deutsche Bank this year and invested in funds replicating a commodity index are missing the biggest returns. And there is little evidence that the strategy will succeed anytime soon.The indexes are weighted toward energy markets, which this year have not kept pace with silver, sugar and copper. The total return from Goldman's commodity index so far is 7.3 percent, the smallest year-to-date profit since 2003. Silver is up 48 percent, copper 54 percent and sugar 19 percent.About $60 billion is held in index- linked funds, including money from Hermes Pensions Management. Philip Richards at RAB Capital's Special Situations hedge fund bought shares of mining companies and commodity producers and is up 36 percent. Schroders' commodity fund has gained 15 percent this year, beating indexes by focusing on metals."Promoters of commodity-index funds are hiding the truth about these investments," said Edwin Denson, a senior analyst in Chicago at UBS's asset-management unit.

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